Govt Orders Implementing Scheme On Pooled Tariff Of Older Power Plants From July 1 

The Ministry of Power, in its latest notification, has asked all states and other concerned institutions to take necessary actions to implement the proposed scheme of pooling tariffs of older thermal power plants whose Power Purchase Agreements (PPAs) have expired. 

The scheme aims to use the power generation capacity of thermal power plants older than 25 years whose PPAs have expired but are in operational conditions. The ministry said that the scheme could reduce the formation of new long-term PPAs and does away with the need for mega investments to set up these plants. These older plans often recover their upfront costs and overcome their debts. The ministry also claimed that such a decision was also paramount, considering the rise of the country’s electricity demand and peak demand. 

As per the scheme, the government has mandated creating a central sector Genco-wise common pool of thermal power generating stations (coal and gas-based) where their PPAs had already expired. It also proposed that any Genco competing with their PPAs should be automatically added to this pool. 

The scheme also envisions creating a single-window system. The states or discoms can submit their willingness for power allocation through the window within 15 days after forming the common pool. In addition, the scheme has mandated that the minimum requisition period for power from the common poll will be five years. Under the new regime, power allocation from the common pool to the states and discoms will be based on new PPAs with the pool with the Gencos. 

The norms of the scheme advocate that the total capacity of the pool will be worked out by adding the capacity of charges of each station in the pool as per the Tariff Regulations of the Central Electricity Regulatory Commission (CERC). The states and discoms under this will be billed a uniform capacity charge based on percentage allocation and total capacity charge of power from the common pool. 

The scheme also deals with implementing merit-order despatch, bundling of renewable energy, and sharing benefits and roles, and responsibilities of the stakeholders, among others.

The Power Ministry’s latest order came after it released its draft version on November 15, 2022, sought a response from the public, and held several consultations.